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Oil prices tread water as traders digest the latest inventory data from the EIA.

The Department of Energy reported this morning that in the week ending April 18, U.S. crude oil inventories increased by 3.5 million barrels, gasoline inventories decreased by 0.3 million barrels, distillate inventories increased by 0.6 million barrels and total petroleum inventories increased by 12 million barrels.

Crude oil prices were mixed following the release of the latest data. Another 26-year high in U.S. oil production and big jump in U.S. crude stockpiles didn’t faze Brent, which has been supported by continued tensions in Eastern Europe. However, WTI sold off as the weight of crude inventories, which are now at the highest levels in 83 years, pressured the U.S. benchmark.

When it comes to Brent, the bottom line is that traders haven’t had enough of an impetus to break prices out of the range that they’ve been in for the past 10 months. We’ve seen an unusual lack of volatility in prices as surging U.S. output has been perfectly offset by production losses in Libya and rising demand around the world. Until something upsets that equation, prices will remain well-behaved.

On the other hand, WTI remains relatively volatile. Expansions in pipeline capacity helped to narrow the U.S. benchmark's discount to other crude oils earlier this year, but that discount is widening again as production and inventories surge. Expect more volatility in WTI has the race between growing infrastructure and growing output continues.

Meanwhile, we are seeing impressive gains in energy-related equities. As we wrote earlier this week, stocks of energy producers have soared this year, easily outperforming the broader S&P 500. That’s because even though oil prices have been more or less flat, many of these companies are still seeing their profits rise rapidly as they grow their oil production.

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